FX.co ★ Ibovespa Weighed by Fiscal and Monetary Worries

The Ibovespa index dipped slightly below the 132,500 mark on Thursday, retreating from recent peaks as investors contended with growing domestic fiscal issues and a tightening monetary policy stance. The Central Bank's recent decision to hike the Selic rate by 1 percentage point—marking its third consecutive increase—has led market watchers to expect further hikes. These anticipated increases could drive the terminal rate to 15.25%, sparking concerns about decreased investment and rising borrowing costs throughout the economy. Additionally, a proposed income tax exemption bill aims to increase the tax-free threshold to R$5,000, intended to aid low-income households. However, this proposal has raised alarms about fiscal deterioration and potential compensatory measures, such as a proposed 10% tax on profits and dividends sent abroad. In the stock market, Vale and Ambev each saw declines of nearly 1%, with major banks also trending downward, while JBS experienced a nearly 2% uptick, supported by positive sentiment surrounding its potential US dual listing.